I saw a farmer on the news last night saying that the trade war would likely cost him $120,000.

I thought three things.

1)Wow....... that's a lot of lost money, and 2)I wish I had $120,000 to lose.3)75% of farmers in the corn belt voted for Trump

I think farmers will be stung, but will survive. My big concern is with other industries (one that use steel to build their products, specifically). Some of those industries run on fairly tight margins already.

When virtually ever economic expert (even the ones on Trump's team) is saying "this is a bad idea", I don't expect it to end well.

The Chinese consume over 50 million tons of pork annually, and part of that meat is from U.S. farms. After the Chinese government announced its 25 percent tariffs on U.S. pork, Marketplace host Kai Ryssdal talked to Bran Duncan, a hog farmer and vice president of the Illinois Farm Bureau, about how it will affect his business. The following is an edited transcript of their conversation.

Kai Ryssdal: I'm sure you've been following the news. How flatfooted, though, were you caught by the fact that these sanctions are apparently coming?

Bran Duncan: Agriculture has been concerned about the overall tenor on trade since prior to the presidential election. Quite frankly, we've been watching. I mean, all the candidates seem to be running away from trade, and we'd hoped once when President Trump got in office that calmer heads will prevail and we wouldn't be in the situation we're in now. So I guess we've been concerned. We've been hoping that the processes that are in place to address trade concerns, say through the WTO, would be utilized instead of a tit-for-tat tariff situation that we find ourselves in now.

Ryssdal: How important is China to the American hog industry?

Duncan: Well, it's important. It's really important in that it's a growth market for us, No. 1. Where we're at with China right now is not what we hope to be in five or 10 years. And they are also very important for cuts of meat called variety cuts that really don't have much value in other parts of the world, including here — think things like snouts and tails and hooves and ears. Things that the Chinese consumer places value on probably would find its way into dumpsters in other parts of the world. So that's an important market, because it adds value to the overall hog.

Ryssdal: Right, which is fundamentally more money in your pocket, right?

Duncan: Oh, absolutely. The saying is, "We like to market everything but the squeal."

Ryssdal: That's pretty good, I never heard that. How long do you figure it's going to be before this actually hits you in the bottom line?

Duncan: Well, I think it already has. I think the psychology has negatively impacted the hog market ever since that the tariffs on steel and aluminum hit. We've seen the futures markets on the Chicago Mercantile Exchange as well as the cash market drop by nearly $20 a head. And there are some other seasonal fundamentals there, but it's not all seasonal. This negative attitude towards trade, especially in my business, support production, where we are heavily export dependent to the point of nearly 30 percent of our production is exported. And when we see this attitude towards China and also tough talk on NAFTA, we saw withdrawal from TPP, which was going to be a very beneficial agreement for pork producers, I think that's all combined to a negative psychology. There's already casualties in this trade, escalating trade fight.

Ryssdal: Talk to me for a second, would you, about the hog infrastructure, because you guys need processing plants and you need, you know, trucking and all of that stuff to get the product to market. Is this an environment friendly to that kind of investment for you?

Duncan: Well, absolutely not at this point. Markets hate uncertainty, investors hate uncertainty. And in agriculture, we battle a lot of uncertainties, be it the weather or disease, what other factors we can deal with out here in rural America. Now we add the uncertainty of trade of our markets and that's not conducive for investment. And the pork industry, over the course of the last three or four years, has made significant investments and improvements. There have been new harvest facilities, there's been new production facilities come on line because pork is the meat of choice around the world, and we are the low-cost producers. We thought we had a trade agreement in place, we thought we knew what the rules of the game were, and we're positioning to take advantage of that. Now we may find ourselves on the outside looking in, and there are plenty of other countries who will be willing to fill those markets.

Farming's a pretty delicate industry in which a few bad years of weather can destroy a family farm. A lot of farmers could take a bath, and while farming will survive (big corporate farms will take over the family businesses and land) even a small rupture in the market can absolutely ruin a lot of families' farms and livelihoods.

Quote:

Agriculture has been concerned about the overall tenor on trade since prior to the presidential election. Quite frankly, we've been watching. I mean, all the candidates seem to be running away from trade, and we'd hoped once when President Trump got in office that calmer heads will prevail and we wouldn't be in the situation we're in now. So I guess we've been concerned. We've been hoping that the processes that are in place to address trade concerns, say through the WTO, would be utilized instead of a tit-for-tat tariff situation that we find ourselves in now.

You hear this a lot from the Trump voters on a bevy of issues. We thought calmer heads would prevail. We thought someone would talk him out of what he wants. We thought he would not be a President like he was a candidate. We thought he'd be something other than what he told us he was when he was campaigning.

I saw a farmer on the news last night saying that the trade war would likely cost him $120,000.

I thought three things.

1)Wow....... that's a lot of lost money, and 2)I wish I had $120,000 to lose.3)75% of farmers in the corn belt voted for Trump

I think farmers will be stung, but will survive. My big concern is with other industries (one that use steel to build their products, specifically). Some of those industries run on fairly tight margins already.

When virtually ever economic expert (even the ones on Trump's team) is saying "this is a bad idea", I don't expect it to end well.

Some will, a lot won't. Margins in farming aren't that good. Especially with $2 corn and $5 soybeans. I've run down the expenses before so I won't here, but I can tell you that I sit here about one week away from planting corn and I'm over a million in the hole this year right now. Farming is a high input cost, low margin business. The hope is to claw all that back and get into the black by the end of the year, but if commodity prices keep slipping it won't happen. Also if the weather doesn't cooperate it won't happen.

We try to keep about a $400,000 cushion in the farm account. This means a couple of years of big losses and we would be done.

A lot of the institutions and norms or whatever seem to have been a sham this whole time - again that's useful information

Sorry for parsing out one piece of a good post, but I don't know about this.

Appointing morons like Ben Carson Betsy Devos Rick Perry Wilbur Ross Linda McMahon to HUD, ED, Energy, Commerce, SBA may make a mockery of having those institutions - but not sure if they were always a sham. If we needed to phase out or redirect these depts(I am not saying we need to or not) this was the worst and least efficient way to do it. The depts and their budgets exist and are not going away by appointing dip [expletive] to wreck them.Clearly not the most lasting damage -these sham appointments - but these depts will undoubtedly be trashed. The cumulative cost of fixing or disbanding will be large.

Then you have other federal appointees that clearly have a role and actual function-Treasury, Interior, EPA. CIA FBI.....the damage there by appointing non-morons ....oi!

I wasn't even thinking of those departments, but given that someone like Trump can win should those even be Presidential appointments? And should they be subject to some kind of renewal vote across both houses? It seems like there ought to be more accountability, and it's too open to abuse. Both in terms of corruption, but also sabotage.

, and the people who believed him and voted for him are the ones who are going to get hit the worst.

Question 1: What is the proper level of concern/sympathy for the trump-voting midwestern pork or soybean farmer who will be economically decimated by this "good and easily won" trade war?Question 2: Will that same hypothetical farmer vote against Trump in the midterms and/or 2020 as a result?

I feel like this is a question I'm uniquely qualified to answer.

1) It should be huge. I've seen a ton of farmer hate online this week "good [expletive] em" sort of thing. The ag economy is the base of all the economy. You have to realize that farmers going under is bad for everyone. Your food cost will go up and worse yet it will me even more consolidation of production. Which I think is bad in any industry.

1a) is you guys don't understand how bad this will be in rural America which is already dying. When these farms go under they are going to take banks with them. I think a lot of city people don't realize that, but of the five banks in my town it's almost undeniable that the two smaller "community" banks will be gone if the farm economy crashes. In 08 during the crash (also rural economy crash that no one talked about) we lost a few banks. This will be a lot worse this time around.

1b) Everything here is tied to farming. Seed and chemical dealers, feed dealers, "farm stores," restaurants (whose main breakfast and dinner crowd are farmers), and dozens of other service industries related to farming (mechanical, veterinary, accounting, etc) are all in danger if the farm economy crashes.

2) Will they vote for Trump again? Probably not. Believe it or not a lot were reluctant the first time around. I know a lot of farmers who vote both ways, particularly for President based on Ag policy. The Farm Bureau was not particularly sold on Trump and his anti TPP stance or his anti immigration stance. In fact if Hillary had not come out against it too (which made no sense to me) I bet the FB would have endorsed her and it would have swung a lot of farmers. Most farmers I know are much more practical than say your Evangelical conservative. They typically vote with their wallet and as I said I can see a lot of them either voting for a good Dem candidate or sitting out the 2020 Presidential.

Now admittedly this is just my community of farmers, but I'm pretty plugged into that and they aren't generally the unreasonable people your run of the mill conservative is.

If there is another farming crisis on the scale of the one in the 1980s, I kind of expect I might either lose my job or have to relocate, or both. That 1980s crisis decimated this area and it took decades to recover, and certain areas never fully recovered. There are still some empty/underutilized factory buildings around here left over from back then. It's going to be ugly if we go through something like that. I hope it can be avoided. But like I said, the situation seems pretty shaky.

, and the people who believed him and voted for him are the ones who are going to get hit the worst.

Question 1: What is the proper level of concern/sympathy for the trump-voting midwestern pork or soybean farmer who will be economically decimated by this "good and easily won" trade war?Question 2: Will that same hypothetical farmer vote against Trump in the midterms and/or 2020 as a result?

I feel like this is a question I'm uniquely qualified to answer.

1) It should be huge. I've seen a ton of farmer hate online this week "good [expletive] em" sort of thing. The ag economy is the base of all the economy. You have to realize that farmers going under is bad for everyone. Your food cost will go up and worse yet it will me even more consolidation of production. Which I think is bad in any industry.

1a) is you guys don't understand how bad this will be in rural America which is already dying. When these farms go under they are going to take banks with them. I think a lot of city people don't realize that, but of the five banks in my town it's almost undeniable that the two smaller "community" banks will be gone if the farm economy crashes. In 08 during the crash (also rural economy crash that no one talked about) we lost a few banks. This will be a lot worse this time around.

1b) Everything here is tied to farming. Seed and chemical dealers, feed dealers, "farm stores," restaurants (whose main breakfast and dinner crowd are farmers), and dozens of other service industries related to farming (mechanical, veterinary, accounting, etc) are all in danger if the farm economy crashes.

2) Will they vote for Trump again? Probably not. Believe it or not a lot were reluctant the first time around. I know a lot of farmers who vote both ways, particularly for President based on Ag policy. The Farm Bureau was not particularly sold on Trump and his anti TPP stance or his anti immigration stance. In fact if Hillary had not come out against it too (which made no sense to me) I bet the FB would have endorsed her and it would have swung a lot of farmers. Most farmers I know are much more practical than say your Evangelical conservative. They typically vote with their wallet and as I said I can see a lot of them either voting for a good Dem candidate or sitting out the 2020 Presidential.

Now admittedly this is just my community of farmers, but I'm pretty plugged into that and they aren't generally the unreasonable people your run of the mill conservative is.

If there is another farming crisis on the scale of the one in the 1980s, I kind of expect I might either lose my job or have to relocate, or both. That 1980s crisis decimated this area and it took decades to recover, and certain areas never fully recovered. There are still some empty/underutilized factory buildings around here left over from back then. It's going to be ugly if we go through something like that. I hope it can be avoided. But like I said, the situation seems pretty shaky.

I think we were headed there before Trump. Now it's just going to be worse. Commodity prices can not support the insane input, land, and equipment prices we are seeing. Land prices have backed off quite a bit from the insanity of two years ago but cash rents have not. I just tried to rent some ground that the owner insisted was worth $300 an acre. My math penciled out to $150 tops. New tractors are 250k for a small one and 700k for the big ones. Combines with heads will get you pretty close to a million. It's just not doable with $2 corn and $5 soybeans and most people are paying for it on credit. I know farmers who owe 20-30 million dollars. A Lot of dominoes are going to fall this year and once they start they probably won't stop for a while.

We are very fortunate in that we have done our best to cash flow our inputs and only borrow on equipment which we can general finance cheap and pay off quick. Others aren't that lucky.

The problem is, with Trump's unchecked power and erratic behavior, nobody knows what they are dealing with. He just likes to play emperor and fancies himself a dealmaker. The deals are all attempted to benefit him and or satisfy his whims/ego.

Thus he will use DACA, farmers or whoever as leverage. Using Amazon though - super dumb. May be the 1st target of his with actual power to fight back. Plus other big businesses and the markets do not like this [expletive] -having one of their own-(even a competitor and not universally well-liked one -but jeesh their stock value has many on the hook) subject of an infantile brain POTUS' mad tweetsThus- Back on topic - the office of the presidecy has had lasting damage.